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Looking for some opinions

(27 Posts)
LuluJakey1 Sat 14-Jan-17 22:09:06

My cousin has asked me and DH what we think. We have told her to get financial advice of course but am interested in your opinion as DH and I disagree.

She is a teacher- at a senior level and 56, so could retire. Has never married, no children and always worked full-time.

Has house worth about £350,000 she thinks, mortgage paid off. No debt at all. Savings of £450,000. If she retired now and did not access her pension until 60, it would be £33,000 a year then and she would get a lump sum of £100,000. Her OAP would be an additional £6800 (I think that is what she said) from 67. She has had enough and wants to retire but is worried about having enough to live on.

I think she has more than enough and should not worry and should enjoy her life. Her outgoings are £500 without food and entertainment.

DH thinks she should work for 4 more years to maximise her pension at £40,000 and lump sum at approx 120,000.

We have told her to get financial advice but interested in your thoughts.

AgentProvocateur Sat 14-Jan-17 22:22:26

I'm with you. She has plenty to retire on. And she should do it now when she's young and healthy enough to make the most of it.

LuluJakey1 Sat 14-Jan-17 23:14:48

That is what I think but DH thinks she might as well consoldate her pension.

LuluJakey1 Sat 14-Jan-17 23:15:07

consolidate

cozietoesie Sat 14-Jan-17 23:20:32

She'd have plenty to live on. (And a few years of good health to enjoy it.)

FlyingSomewhere Sun 15-Jan-17 00:15:48

I would not waste a single penny of a financial advisor. I know quite a few of them that could do with some financial advice themselves.

House value aside, with 450k in savings she's shown herself to be a frugal and financially sensible person.

Unless she really enjoy her job, I'd retire in a heartbeat if I was her.

cozietoesie Sun 15-Jan-17 00:22:43

She'd be hard put, with those outgoings, to actually spend the pension she would get at 60 - and with cash in hand/savings of half a million pounds at that age? Blimey.

ijustwannadance Sun 15-Jan-17 00:28:41

She could die before 60. Why waste time in a job she's fed up of when she very clearly has more money than she knows what to do with.

caroldecker Sun 15-Jan-17 00:56:31

Assuming no investment return, spending £40k a year from savings until 60 will cost her £160k.
Then £7k a year to up her £33k pension to £40k, the remaining £290k of savings would last her 41 years, ie until aged 101.
Bonkers to work unless she wants to.

Hellmouth Sun 15-Jan-17 00:59:52

Omg her set up sounds amazing.

Tell her to enjoy her retirement 😄

FrozeninSummer Sun 15-Jan-17 03:13:56

Really? How can she be in any doubt whether she can afford it or not?! I don't think she needs a financial advisor - unless she is planning on spending 100k a year for the next 4 years then she'll have plenty of savings left at 60, plus the additional 100k plus the way above average 33k a year pension - which increases to the 40k anyway she needs in another 7 years.

I honestly can't understand why she would doubt herself - a far bigger problem for her (and a much nicer one) is whether she will be able to spend it all!! Particularly if she has no children & no one she needs to leave it to.

I can't possibly imagine that another 7k a year is going to matter to someone with savings of 450k. Even if she blew the whole lot and the 100k lump sum, on a pension of 33k pa she will always have enough to be comfortable by most people's standards given she has no mortgage. Plus if it came down to it - she has the option to downsize as well and release equity.

Tell her from me to enjoy it. She sounds like she is in amazing position - very very jealous indeed.

And yes, unlikely to happen - but I remember discussing with a relative whether they should stick out a job they hated for the extra decent pension they'd get. They died unexpectedly at 58. That conversation would go differently now I am sure. But my relative had a spouse and children to think about and certainly no 450k savings to fall back on so it was the right decision at the time. Your cousin should be handing in her notice on Monday !!!

Out2pasture Sun 15-Jan-17 05:44:26

lulu i'm in Canada so things might be slightly different but just in case; with a generous pension plan, how much of her government oap will she be able to keep?
here in Canada the plan alone would put someone in the position that the oap would essentially be clawed back on taxes. she will still have a very good income but worth knowing.

does her pension provider offer pension seminars?

HollyBollyBooBoo Sun 15-Jan-17 06:02:21

She's seriously worried? What does she think she's going to spend it all on?!!

LuluJakey1 Sun 15-Jan-17 08:36:06

I know what she is worrying about. Her parents left her some of the money - they had a house. She has always worried about being poor and old and can't seem to see past that- her grandmother was very very poor in the 1970s and she remembers that.
Thanks for the comments. Her union provides financial advice seminars and she is going to book onto one for retiring Heads and Deputies.
I think she should take it now and travel and enjoy it.

SvartePetter Sun 15-Jan-17 08:46:26

Google the 4% rule. There is a study ( trinity study) that says that in the very vast majority of cases you can withdraw 4% of capital per year and never run out of money, assuming a sensible investment strategy. In her case that is 18k per annum+ her lap once that kicks in. I would retire and not look back!

Also, if her outgoings are 6k per annum + food and entertainment, is she suddenly going to start spending massively?

ijustwannadance Sun 15-Jan-17 09:26:51

She could buy my house 3 times over. For cash!

I can understand her reluctance about being poor but no mortgage and £450k? She's clearly not the type to flash the cash and spend it all.

Just tell her to be wary of people trying to get her to invest it. My parents lost some money due to a shit financial advisor who was actually employed by a bank.

BarbaraofSeville Sun 15-Jan-17 10:05:29

In her position I would have retired years ago (whenever the house was paid off and the savings were past a quarter of a million, or maybe at around 50 ish).

She is clearly frugal and doesn't need to earn what she does to have built up that amount of savings. She could always do voluntary work or a bit of easy low stress part time work if she is worried about being lonely, isolated or bored.

As far as investments would go, I would buy the max amount of premium bonds, put around £100k in cash, some in FTSE trackers, some in bank fixed interest stuff and maybe something with a little more risk and potential for growth, and/or buy some shares that pay a decent dividend.

Does she have any interest in BTL or is she not bothered about being a landlord? I don't think I would in the current market. If she looks at the relevant moneysavingexpert sections and spends some time on that site, she will get guidance on ways to do this. Or for quite a large sum it may be worth paying an IFA, I'm not sure.

teacher54321 Sun 15-Jan-17 10:11:32

I remember a talk from the pensions man at school a few years ago (so specifically teachers pensions) he said that if you retire at 60 as a teacher you live on average for 12 years after retirement. If you retire at 65 it's 18 MONTHS shock tell her to hand in her notice on Monday!

cozietoesie Sun 15-Jan-17 10:26:15

Lulu

My only concern for her would be, that with that amount of money sitting around accessible, she's a prime target for some harebrained investment scheme - or even, Goodness forbid, some 'lovelorn soon to be ex-soldier living in the middle-East' aka a group of criminals who want to fleece her.

LuluJakey1 Sun 15-Jan-17 11:47:22

She won't be taken advantage of, she is really perceptive about people and has amazing instincts about them.
I think she has been working up to this and now it is a strong possibility to choose it, it is a bit overwhelmng for her as she has never not worked full-time and has always had good money coming in. She says it feels strange to think that would be it in terms of her career. However, I am sure, if she wished, she could still pick up part time, short-contract consultancy stuff if she was bored. She is very well-respected.
Thanks everyone.

LuluJakey1 Sun 15-Jan-17 11:49:34

She is not interested in BTL. She reckns she could lve very comfortable, including all expenses and holidays , car etc on £30,000 a year for the next 4 years. She would not pay tax on it as it is savings- just on interest.

Babyroobs Sun 15-Jan-17 12:34:17

I can understand her dilemma. Whilst she will obviously have enough to live on whatever she does she may be thinking further ahead to her later years and may want to make sure she has enough in the bank to ensure she can afford good care should she need it. As she has no children then this may be a big concern for her to be able to afford the best care possible. I know this may be a long way off but it is something which people worry about.
My FIL died recently and had a lot of money in the bank that no-one really knew about. I often think perhaps he was worried that he may need to go into a care home and wanted to be able to buy the very best care, knowing that his children lived far away and had full time jobs. I think he was pretty frugal shopping over the years and maybe this was the reason. Even hundreds and thousands in the bank will diminish quickly if you're paying £800+ a week for a care home!

cozietoesie Sun 15-Jan-17 12:41:53

She'll probably find that they won't let her physically out of the door until she signs that supply teaching contract! grin

LuluJakey1 Sun 15-Jan-17 19:08:13

She definitely won't be supply teaching grin
I am interested to see what she will decide.

cozietoesie Sun 15-Jan-17 23:15:09

....She definitely won't be supply teaching....

Ha! grin

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